OREANDA-NEWS. Fitch Ratings assigns an 'A+' rating to \$68,905,000 of California Health Facilities Financing Authority insured revenue bonds (Northern California P4resbyterian Homes and Services, Inc.), based on the support provided by the Cal-Mortgage Loan Insurance Division.

The bonds are expected to sell via negotiated sale the week of March 16, 2015.

The Rating Outlook is Stable.

SECURITY
The bonds will be insured by the State of California Office of Statewide Health Planning and Development (OSHPD). If moneys are not available to pay debt service, OSHPD will be obligated to continue to make payments on the bonds. If necessary, the state's treasurer will issue debentures to holders of the bonds fully and unconditionally guaranteed by the State of California.

KEY RATING DRIVERS

STATE ENHANCEMENT LINKED TO GO RATING: The rating is based on the support provided by the Cal-Mortgage Loan Insurance Division of the State of California. The state's treasurer is required to issue debentures on parity with the state's general obligation (GO) bonds if defaults on loans deplete the reserve balance in the health facility construction loan insurance fund (HFCLIF). This results in a rating on par with that assigned to state GO bonds.

SEVERAL LAYERS OF PROTECTION: The rating is ultimately linked to the state treasurer's ability to issue debentures on parity with state GO bonds. Prior to that, several layers of protection ensure timely bondholder payment in the event that a program participant defaults, and provides ample time to ensure bondholder payment.

RECENT STATE GO UPGRADE: Institutionalized changes to fiscal operations in recent years, when combined with the ongoing economic and revenue recovery, have enabled the state to materially improve its financial position, enhancing its ability to address future fiscal challenges. Progress includes timely, more structurally sound budgets, spending restraint, continued sizable reductions in budgetary debt, and initial funding of reserves. Fitch upgraded the state's GO rating to 'A+' from 'A' on Feb. 25, 2015.

RATING SENSITIVITIES

PROGRAM CHANGES OR SHIFTS IN STATE CREDIT QUALITY: The rating is sensitive to changes to existing Cal-Mortgage program parameters, or to changes in the state's GO bond rating, to which this rating is linked.

CREDIT SUMMARY
Cal-Mortgage is a division of the State of California OSHPD. Cal-Mortgage's mission is to improve access to capital for qualifying health care facilities without cost to taxpayers. The agency primarily guarantees debt issued on behalf of nonrated and below-investment grade health care institutions that demonstrate community need.

Bond proceeds will be used by Northern California Presbyterian Homes and Services, a non-profit public benefit corporation that owns and operates three continuing care retirement communities (CCRC), to finance renovations at two facilities and refund outstanding series 1998 and 2004 bonds.

The Cal-Mortgage program was originally authorized by voters in 1968. As of June 30, 2014, Cal-Mortgage insured \$1.67 billion in outstanding loans covering 109 facilities. The statutory maximum for insured risk is \$3 billion, although this level has never been reached. The bonds have access to the health facility construction loan insurance fund (HFCLIF), a special fund which receives fee and premium income, among other receipts, and is segregated from the state's general fund and unavailable for general fund cash flow purposes. The HFCLIF balance was \$169.7 million as of Oct. 31, 2014.

In the event of a default by an insured borrower, debt service reserves and the HFCLIF balance are available to bondholders. If defaults on insured loans ever caused the HFCLIF and debt service reserves to be depleted, statutes and transaction documents require the state treasurer to issue debentures on parity with the state's GO bonds in the amount of principal and interest due but not paid, at a payment schedule and coupon rate identical to those of the bonds associated with the defaulted loan. These provisions support a rating on Cal-Mortgage equal to that of the state's general obligation bonds, currently rated 'A+' with a Stable Outlook by Fitch.

For further information on the State of California's GO bond rating, please refer to Fitch's press release dated Feb. 25, 2015, available on Fitch's web site at 'www.fitchratings.com'.